High home prices aren’t stopping more Americans from becoming homeowners. But seniors are bucking that trend.
The homeownership rate nationwide was 64.8% in the fourth quarter of 2018, according to data released Thursday by the U.S. Census Bureau. That’s up from 64.4% in the third quarter and 64% a year earlier, making this the eighth straight quarter in which the homeownership rate increased. The rate is now at its highest level since 2014.
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However, the homeownership rate for those 65 year and over actually dropped to 78.8% from 79.2% a year earlier, echoing other recent research that has pointed toward the trend of seniors shifting from owning to renting their abodes.
A recent analysis from real-estate website RentCafe found that the number of renters over 60 has grown by 43% over the past decade, faster than any other age group. For comparison, the renter population under age 35 only increased 7% over the last decade, from roughly 14 million to nearly 15 million people.
By 2035, RentCafe economists predict that seniors will represent the second largest group of renters in the country, representing some 18.6 million people.
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“As their children move out, they find themselves alone, in a big house that costs a lot to maintain, causing them to rethink their housing choices,” RentCafe noted in its report.
This trend of seniors turning to renting has been especially pronounced in Sun Belt cities. In Austin, Texas, the number of renters over 60 has increased 113% over the last 10 years to nearly 25,000, or 12% of the city’s renter population.
Seniors turning to renting would be good news for younger Americans looking to buy, who are largely responsible for the post-recession rebound in the country’s homeownership rate.
A recent study from Freddie Mac FMCC, +1.95% argued that senior citizens are contributing in part to the country’s current housing shortage. Some 1.4 million homes are being “held off the market” by owners born between 1931 and 1947, many of whom are choosing not to down-size. Seniors still represent the demographic that is most likely to be a homeowner, according to the U.S. Census Bureau.
But if RentCafe’s predictions are true, and more of these seniors do eventually decide to switch to renting, those extra units would go a long way toward addressing the current housing shortfall, which Freddie Mac previously calculated to be around 2.5 million units nationwide. However, this would not relieve the biggest headwind driving the housing shortage: the lack of new construction across all forms of housing.
